'Comic Wars' Explained

Embarrassed billionaires tried to keep a lid on the story, but it had to be told: how America's greatest comic book company - Marvel - was driven to the brink of insolvency by dueling tycoons and rescued by two obscure entrepreneurs.

In "Comic Wars: How Two Tycoons Battled Over The Marvel Comics Empire - And Both Lost," award-winning author and CBS News Radio Correspondent Dan Raviv tells the colorful, dramatic and frequently comical story of the fight for control of an American pop culture icon.

In 1996, Marvel Entertainment, home of Captain America, X-Men, the Incredible Hulk and Spider Man, had accumulated $1.6 billion in debt and was headed for bankruptcy. Today, Marvel has been revitalized and is raring to become a media powerhouse.

Raviv spoke with CBSNews.com's Alexandra Cosgrove about his new book.

Cosgrove: Was this a typical hostile takeover?

Raviv: You have to realize they are all different in various ways. This is certainly a prime example of how you can just buy the bonds very cheap and then come with a claim that you own the whole company. I think that’s probably the key lesson for a lot of people in the business, what Carl Icahn did. And he does do it with other companies, too.

Cosgrove: What made you want to write this book? Your other books have been about Israel, a very serious topic.

Raviv: Based in Miami for CBS News, I kept meeting people from New York who were working on the Marvel comics fight. I wasn’t a business reporter, so I didn’t think it was for me. But just by coincidence, I met people who were in the banking field and lawyers who were on vacation and would tell me about these things.

Probably the real "grabber" was the fact that two Israelis "won" the battle. And I had covered the Middle East and was always interested in what Israelis were doing. And to my surprise, the winners were two Israelis so I really wanted to look into that. And once I did, I started making calls and started meeting people, and I just got drawn in. It meant that I had to learn a lot that I didn’t know, because I was not a business expert. I spent a lot of time on legal documents and I spent a lot of time in Wilmington, Del., where the U.S. bankruptcy court is. I learned a lot.

Cosgrove: Did you have attorneys helping you out?

Raviv: Not one person really steady, but if I met with lawyers, I found them to be very helpful; lawyers who either worked on this case or work on "bankruptcy" cases and takeover battles. I would go and see them, and almost all of them had heard of the Marvel struggle and found it interesting that these two gigantic tycoons, Ron Perelman and Carl Icahn, had gotten defeated. Everybody knew a little about it, and then I would tell them what I had on paper but I didn’t understand- why people had done something or how you could even claim that if you own a substantial portion of the bonds, what’s your claim to the shares - to the common stock. Lots of lawyers explained it, in fact. People were generally very patient and did explain it. And like I say, my task was to try to make it clear to readers.

Raviv: I hope it will attract various audiences. It is being positioned by the publisher as a business book. People who were involved in business and lawyers who work on this sort of stuff - corporate lawyers - are showing a lot of interest in this fight and how it took place.

But comic book fans, and there are still a few million in this country who do buy comic books from time to time, knew that something had gone wrong with Marvel. They heard about the bankruptcy in 1996. They didn’t understand it, but they could also see that the quality of the comic books had declined. Some of their favorite artists and writers weren’t working for Marvel any more and they wondered why. So I’m finding quite a lot of interest on the part of comic book fans. And so some of my public appearances to support the book are taking place in comic book stores, and quite a few people come with lots of questions.

Cosgrove: Did you read comics as a kid? I mean, did you have a vested interest in this story from that point of view?

Raviv: Well, about the same as most American teen-age boys. And it is boys a lot more than girls. I read the "other" brand; usually you were either a DC Comics fan or a Marvel fan.

I like the DC Comics probably because the heroes were more clean-cut, to tell you the truth. You knew what to expect from Superman and Batman and the Justice League of America.

Marvel, on the other hand, has stood on its own. As for its characters and its comic books, they were always a little funky, unpredictable. There was a wise guy sense of humor, and that was mainly the chief writer, the editor-in-chief Stan Lee, and his sense of humor. You didn’t know what to expect from these heroes. In their private lives, they had all sorts of complications. Sometimes they were conflicted and not sure whether to act or not.

I was reading the DC Comics, where you knew Superman would absolutely stand up for truth, justice, and the American way. With the Marvel characters, you’re actually never quite sure. I think they are more interesting, but maybe as a teen-ager I didn’t realize it.

Cosgrove: Did you meet with any of the principals of this book personally?

Raviv: I met a lot of the principals, but I promised everyone along the way that I wouldn’t single out who cooperated and who didn’t. Almost everyone was very reluctant to talk, especially the losing side or losing sides.

The Perelman and Icahn camps, they don’t like this case. Perelman was humiliated. The company went bankrupt. He had to file for Chapter 11 protection. On the other hand, it’s possible that Perelman doesn’t like to talk about it also because he did profit from the junk bonds. He was chairman of Marvel Entertainment for seven years and he’s being sued now by former shareholders, or stockholders, and former creditors, who claim that he pocketed unjustly more than $500 million.

I did my own calculation and figure that he profited from the junk bonds, minus his various reinvestments to the company, to the tune of $280 million. Again, maybe that’s why he doesn’t want to talk about it; it was a public humiliation but he made money.

Carl Icahn just lost money, and doesn’t want to talk about Marvel publicly because it was just embarrassing to him. He and his people like to say he has a fabulous batting average, so why talk about one of his very few strikeouts.

On the other hand, the winners, the people who now control the company, the two Israelis and the management there, they’re proud of what they’re doing, but they like to say they’re too busy doing what they’re doing. They’re working on a movie, they’re still putting out the comic books, they’re repositioning the company, and nobody wants to be seen as cooperating with a journalist on this type of thing. Take it from me: I spoke to a lot of people involved directly in the case; they just don’t want to be singled out.

Cosgrove: Just reading about these people, I don’t know how you can talk to them…

Raviv: They’re really, really colorful. They’re really, really tough. I find that people who are worth half a billion dollars or more, they put on their pants one leg at a time like us, but some of them of course think they are close to God. They have all the answers and people who serve them all the time. But some of them are more like plain folks; you actually could talk to them. They just struck it rich; some of them can’t even believe it.

Cosgrove: Those two Israelis, (Ike Perlmutter and Avi Arad -- who "saved" the company) they have different styles?

Raviv: Absolutely, they’re really fascinating. I compare them with Felix and Oscar from “The Odd Couple.” But what’s telling about it in a business sense is that any corporation these days needs to have two things, and it’s hard to find in any one person. It has to have some sensitivity and understanding toward its product and its customers.

In the case of Marvel, that would mean you care about Spider Man and the other characters, and you care about your core customer - the comic book buyers. Now, the management of Marvel for many years didn’t care about that. So right now, one of the two Israelis, Arad, loves the Marvel characters, and really cares about protecting them. In the Spider Man movie, he wanted to make sure that Spider Man never kills anybody.

The other Israeli, Perlmutter, doesn’t read the comics still and doesn’t know all the characters. And yet he knows how to rescue failed companies, how to go to court, how to argue, how to consider the balance sheet, how to be careful with money. So I think this company is lucky now. Perlmutter knows everything about balance sheets and being economical and how to fight hard in U.S. bankruptcy court and take over a company.

Avi Arad now lives in California, and he’s artistic and creative and he loves being a producer of the movies, and he has a very large public style. Ike Perlmutter is very private, goes to sleep early, doesn’t go to see movies, doesn’t read comic books, very different style of person. So they perhaps are the ideal partners because they’re so different.

Cosgrove: What do you think the future is going to hold for Marvel?

Raviv: You can’t be sure about share price; it (the company) has a board of directors who mainly are always looking at the price on the New York Stock Exchange. You never know, that has to do with hype and expectations for growth and all that. But as for the company itself, it certainly seems to be on its feet and different than it was before the bankruptcy.

Before the bankruptcy, it produced baseball cards and sports trading cards because those are the areas Perelman had expanded into, of course through the comic books. And it did toys; Toy Biz was the company that was a subsidiary of Marvel and then turned around and swallowed Marvel. Ike and Avi were the masters of Toy Biz. Now, hey kept the toy division but they’re much more economical with it. It’s making some money. It’s a risky business, toys. The comic books, Perlmutter made sure to be careful even about the cost of paper and ink, and so comic books are making more money. But they’re not huge. The comic books haven’t made a huge comeback in the country. It’s a healthy division.

By far, it’s the licensing division that will make them the money. That includes selling the rights to make movies. Marvel doesn’t have to invest in making the movies. They just reap part of the profits. Licensing looks like an easy way of making money. They swear to me it’s not easy. You have to cut a good contract, protect the value of the characters. It’s clearly the movies and the licensing of other products that comes from that: video games, the DVD rights when the movies become DVDs. All of that adds up to a lot more money than comic books ever could.